Monday, 20th December 2010

Quotes Charlie Munger

Written by George Traganidas Topics: Quotes

Charlie Munger

The whole concept of dividing it up into ‘value’ and ‘growth’ strikes me as twaddle. It’s convenient for a bunch of pension fund consultants to get fees prattling about and a way for one adviser to distinguish himself from another. But, to me, all intelligent investing is value investing – acquiring more than you are paying for. You must value the business in order to value the stock.
— Charlie Munger

The best thing a human being can do is to help another human being know more.
— Charlie Munger

Acquire worldly wisdom and adjust your behavior accordingly. If your new behavior gives you a little temporary unpopularity with your peer group then to hell with them.
— Charlie Munger

In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time – none, zero.
— Charlie Munger

Experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime. A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind that loves diagnosis involving multiple variables. And then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past.
— Charlie Munger

I find it quite useful to think of a free-market economy – or partly free market economy – as sort of the equivalent of an ecosystem. Just as animals flourish in niches, people who specialize in some narrow niche can do very well.
— Charlie Munger

The number one idea is to view a stock as an ownership of the business and to judge the staying quality of the business in terms of its competitive advantage. Look for more value in terms of discounted future cash-flow than you are paying for. Move only when you have an advantage.
— Charlie Munger

Over the very long term, history shows that the chances of any business surviving in a manner agreeable to a company’s owners are slim at best.
— Charlie Munger

It’s not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it – who look and sift the world for a mispriced bet – that they can occasionally find one.
— Charlie Munger

And the wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time they don’t. It’s just that simple.
— Charlie Munger

Mimicking the herd invites regression to the mean.
— Charlie Munger

Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.
— Charlie Munger

Acknowledging what you don’t know is the dawning of wisdom.
— Charlie Munger

Above all, never fool yourself, and remember that you are the easiest person to fool.
— Charlie Munger

Determine value apart from price; progress apart from activity; wealth apart from size.
— Charlie Munger

Recognize reality even when you don’t like it – especially when you don’t like it.
— Charlie Munger

Remember that reputation and integrity are your most valuable assets – and can be lost in a heartbeat.
— Charlie Munger

I think track records are very important. If you start early trying to have a perfect one in some simple thing like honesty, you’re well on your way to success in this world.
— Charlie Munger

I’m right, and you’re smart, and sooner or later you’ll see I’m right.
— Charlie Munger

We try more to profit from always remembering the obvious than from grasping the esoteric.
— Charlie Munger

Intelligent people make decisions based on opportunity costs.
— Charlie Munger

If all you succeed in doing in life is getting rich by buying little pieces of paper, it’s a failed life. Life is more than being shrewd in wealth accumulation.
— Charlie Munger

Someone will always be getting richer faster than you. This is not a tragedy.
— Charlie Munger

Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts. Slug it out one inch at a time, day by day. At the end of the day – if you live long enough – most people get what they deserve.
— Charlie Munger

Over the long term, it’s hard for a stock to earn a much better return that the business which underlies it earns. If the business earns six percent on capital over forty years and you hold it for that forty years, you’re not going to make much different than a six percent return – even if you originally buy it at a huge discount. Conversely, if a business earns eighteen percent on capital over twenty or thirty years, even if you pay an expensive looking price, you’ll end up with one hell of a result.
— Charlie Munger

You must have the confidence to override people with more credentials than you whose cognition is impaired by incentive-caused bias or some similar psychological force that is obviously present. But there are also cases where you have to recognize that you have no wisdom to add – and that your best course is to trust some expert.
— Charlie Munger

The safest way to try to get what you want is to try to deserve what you want. It’s such a simple idea. It’s the golden rule. You want to deliver to the world what you would buy if you were on the other end.
— Charlie Munger

I’m not entitled to have an opinion unless I can state the arguments against my position better than the people who are in opposition. I think that I am qualified to speak only when I’ve reached that state.
— Charlie Munger

Thinking that what’s good for you is good for the wider civilization, and rationalizing foolish or evil conduct, based on your subconscious tendency to serve yourself, is a terrible way to think.
— Charlie Munger

If you don’t allow for self-serving bias in the conduct of others, you are, again, a fool.
— Charlie Munger

Avoid working directly under somebody you don’t admire and don’t want to be like.
— Charlie Munger

Intense interest in any subject is indispensable if you’re really going to excel in it.
— Charlie Munger

Never, ever, think about something else when you should be thinking about the power of incentives.
— Charlie Munger

Fixable but unfixed bad performance is bad character and tends to create more of itself, causing more damage to the excuse giver with each tolerated instance.
— Charlie Munger

Everybody engaged in complex work needs colleagues. Just the discipline of having to put your thoughts in order with somebody else is a very useful thing.
— Charlie Munger

This is really crucial: Warren [Buffett] is one of the best learning machines on this earth. The turtles who outrun the hares are learning machines. If you stop learning in this world, the world rushes right by you.
— Charlie Munger

To me, it’s obvious that the winner has to be very selective. It’s been obvious to me since very early in life. I don’t know why it’s not obvious to very many other people.
— Charlie Munger

Mankind invented a system to cope with the fact that we are so intrinsically lousy at manipulating numbers. It’s called the graph.
— Charlie Munger

Some people seem to think there’s no trouble just because it hasn’t happened yet. If you jump out the window at the 42nd floor and you’re still doing fine as you pass the 27th floor, that doesn’t mean you don’t have a serious problem. I would want to address the problem right now.
— Charlie Munger

Organized common (or uncommon) sense is an enormously powerful tool. There are huge dangers with computers. People calculate too much and think too little.
— Charlie Munger

Almost all good businesses engage in ‘pain today, gain tomorrow’ activities.
— Charlie Munger

If you buy something because it’s undervalued, then you have to think about selling it when it approaches your calculation of its intrinsic value. That’s hard. But if you buy a few great companies, then you can sit on your $%@. That’s a good thing.
— Charlie Munger

A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. And that is why we say that having a certain kind of temperament is more important than brains. You need to keep raw irrational emotion under control. You need patience and discipline and an ability to take losses and adversity without going crazy. You need an ability to not be driven crazy by extreme success.
— Charlie Munger

There ‘s no way that you can live an adequate life without [making] many mistakes.
— Charlie Munger

In investment management today, everybody wants not only to win, but to have a yearly outcome path that never diverges very much from a standard path except on the upside. Well, that is a very artificial, crazy construct. That’s the equivalent in investment management to the custom of binding the feet of Chinese women.
— Charlie Munger

Life in part is like a poker game, wherein you have to learn to quit sometimes when holding a much loved hand.
— Charlie Munger

Any year that passes in which you don’t destroy one of your best loved ideas is a wasted year.
— Charlie Munger

Choose clients as you would friends.
— Charlie Munger

The best armour of old age is a well-spent life preceding it.
— Charlie Munger

When you borrow a man’s car, always return it with a tank of gas.
— Charlie Munger

If only I had the influence with my wife and children that I have in some other quarters!
— Charlie Munger

Take a simple idea and take it seriously.
— Charlie Munger

In business we often find that the winning system goes almost ridiculously far in maximizing and or minimizing one or a few variables — like the discount warehouses of Costco.
— Charlie Munger

Don’t do cocaine. Don’t race trains. And avoid AIDS situations.
— Charlie Munger

We look for a horse with one chance in two of winning and which pays you three to one.
— Charlie Munger

You’re looking for a mispriced gamble. That’s what investing is. And you have to know enough to know whether the gamble is mispriced. That’s value investing.
— Charlie Munger

It takes character to sit there with all that cash and do nothing. I didn’t get to where I am by going after mediocre opportunities.
— Charlie Munger

A great business at a fair price is superior to a fair business at a great price.
— Charlie Munger

No wise pilot, no matter how great his talent and experience, fails to use his checklist.
— Charlie Munger

There are worse situations than drowning in cash and sitting, sitting, sitting. I remember when I wasn’t awash in cash — and I don’t want to go back.
— Charlie Munger

…it never ceases to amaze me to see how much territory can be grasped if one merely masters and consistently uses all the obvious and easily learned principles.
— Charlie Munger

Once you get into debt, it’s hell to get out. Don’t let credit card debt carry over. You can’t get ahead paying eighteen percent.
— Charlie Munger

If you always tell people why, they’ll understand it better, they’ll consider it more important, and they’ll be more likely to comply.
— Charlie Munger

Spend less than you make; always be saving something. Put it into a tax-deferred account. Over time, it will begin to amount to something. This is such a no-brainer.
— Charlie Munger

You don’t have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long time.
— Charlie Munger

Three rules for a career: 1) Don’t sell anything you wouldn’t buy yourself; 2) Don’t work for anyone you don’t respect and admire; and 3) Work only with people you enjoy.
— Charlie Munger

I won’t bet $100 against house odds between now and the grave.
— Charlie Munger

I try to get rid of people who always confidently answer questions about which they don’t have any real knowledge.
— Charlie Munger

…being an effective teacher is a high calling.
— Charlie Munger

I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart…
— Charlie Munger

Without numerical fluency, in the part of life most of us inhibit, you are like a one-legged man in an ass-kicking contest.
— Charlie Munger

In my life there are not that many questions I can’t properly deal with using my $40 adding machine and dog-eared compound interest table.
— Charlie Munger

Investing is not supposed to be easy. Anyone who finds it easy is stupid.
— Charlie Munger

“Warren often talks about these discounted cash flows, but I’ve never seen him do one. If it isn’t perfectly obvious that it’s going to work out well if you do the calculation, then he tends to go on to the next idea.” Buffett retorted: “It’s true. If (the value of a company) doesn’t just scream out at you, it’s too close.”
– Charlie Munger

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2 Comments to Quotes Charlie Munger

John L.
31 July 2013

Excellent aggregation of a man I’m currently studying. Charlie is a great life role model. I like your site as well. Keep it up Sir!

Andrew
8 November 2014

So many great quotes! I’ve been reading about Charlie for a while now and quite a few here are new to me.

I’m a huge fan of checklists, so this one in particular appeals to me:

===
No wise pilot, no matter how great his talent and experience, fails to use his checklist.
— Charlie Munger
===

Thanks for posting this!

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